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Indoor sports facilities can host several types of sports including but not limited to basketball, tennis, handball, racquetball, wrestling, weightlifting, swimming, cheerleading, and gymnastics. Your facility may serve concessions, sell sporting equipment, hire instructors and coaches, and even include bleachers or stadium seating to accommodate spectators. Because every indoor sports facility is unique and can include a wide range of amenities, extensive business insurance is vitally important to ensure you do not miss any coverage gaps.
What insurance coverage do I need for my indoor sports facility?
There are many types of insurance coverage to consider, but these policies are particularly relevant to indoor sports facilities:
General Liability Insurance
General liability insurance financially protects your business if you unintentionally cause bodily injury, property damage, personal injury, or advertising injury to a third party. The customers, players, students, and instructors of your indoor sports facility are all pushing their physical limits and by doing so, they increase your liability exposures. Your facility may house locker rooms or showers, causing an additional risk for slip-and-fall incidents.
Additionally, general liability insurance covers third-party bodily injury or property damage resulting from product liability. You could be held liable if a customer is injured or becomes ill from the sporting equipment sold at your facility or from the concessions served during your events.
General liability insurance can also provide funds for lawsuits based on non-physical injuries. For instance, if you are accused of copyright infringement in advertising, slander, or libel, general liability insurance provides financial protection against these claims.
Examples:
- Bodily injury: A customer of your indoor sports facility trips on volleyball nets that were improperly stored and sustains a wrist injury. Your general liability insurance will cover medical costs associated with this bodily injury as well as legal fees should the customer decide to sue your business.
- Products and completed operations: Your indoor sports facility decides to manufacture and sell custom gymnastic tumbling mats so your clients can practice at home. Your customers discover that your tumbling mats do not provide enough traction and many are injured when the mats slip under them during practice. Your insurer would pay for medical expenses and damages if the injured customers sue.
- Personal and advertising injury: Your indoor sports facility creates an advertising campaign promoting an upcoming wrestling tournament. However, the artwork and text you’ve used look exactly like a competitor’s ad campaign, and your business is sued for copyright infringement. Your insurer would financially cover these legal fees.
Commercial Property Insurance
Commercial property insurance can protect the value of your indoor sports facility if an unexpected disaster damages or destroys your property. Common perils covered by commercial property insurance include fire, theft, vandalism, windstorm, and water damage.
Indoor sports facilities are a large investment, and it can be difficult to recoup your losses in the event of property damage. Property exposure for your facility may also be high due to the wiring for lighting, sound systems, and other electronic equipment used during sporting events. Furthermore, stage preparations for tournaments often include flammables, and if your indoor sports facility serves concessions, food preparation done on the premises further increases your risk.
Example:
- Faulty wiring in your indoor sports facility’s sound system causes an electrical fire, which destroys your equipment and causes significant structural damage to your building. Your insurer would pay to replace your sound equipment and repair your building.
Professional Liability Insurance
If your indoor sports facility hires trainers, coaches, or instructors, then professional liability insurance is a critical type of coverage for your business. Professional liability insurance provides funds for lawsuits and damages related to the professional advice and services provided by your facility. A dissatisfied client may file a lawsuit against your business for work errors, inaccurate advice, negligence, or even failure to deliver promised results.
Example:
- During a racquetball training session, one of your instructors pushes a client beyond his physical limits even though the client is recovering from a recent knee injury. After the session, your client discovers that he has reinjured his knee and requires medical attention. He sues your business claiming that your instructor’s negligence aggravated his injury. Your professional liability insurance would provide funds for the legal fees of this lawsuit.
Workers’ Compensation Insurance
Workers’ compensation insurance provides financial and medical benefits to employees who suffer work-related illnesses or injuries during the course of their work. This coverage includes the employee’s medical expenses, rehabilitation, and a portion of lost wages. Workers’ compensation insurance can also provide funeral, burial, and death benefits for the employee’s surviving family in the case of a work-related death.
Your trainers, instructors, and coaches are particularly prone to workplace injuries and long-term health conditions resulting from the physical nature of their work. As for your sporting events, employees who set up equipment and lighting are at risk for injuries such as cuts, electrical shocks, slip-and-fall injuries, back injuries, and sprains.
Each state has its own regulations and requirements for workers’ compensation insurance so it is important to understand your state’s requirements to ensure that you have adequate coverage for your employees.
Example:
- While cleaning your scoreboard, an employee of your indoor sports facility misses a step on the ladder and falls from a great height. His fractured hip requires emergency medical attention, surgery, and physical therapy. Your insurer will provide funds for his medical expenses as well as a portion of his lost income while he is recovering and unable to work.
Liquor Liability Insurance
If your indoor sports facility serves alcohol, your business is exposed to several risks. Liquor liability insurance serves to protect your business from liability in situations where individuals cause injury or damage to others after consuming alcohol sold by your facility. For instance, your business may be held liable if intoxicated customers cause car accidents, unintentionally injure another person, start a fight, or damage someone else’s property. Liquor liability insurance can cover damages and legal expenses in the case of a lawsuit.
Example:
- During a basketball game at your indoor sports facility, an intoxicated spectator gets increasingly more angry as the opposing team scores points. He starts a fight with another spectator who is cheering for the opposing team, and medical attention is required for the other patron. The injured patron files a lawsuit against your business claiming you were unable to recognize the effects of excessive alcohol consumption. Your liquor liability insurance would cover legal costs and any resulting settlements in the lawsuit.
Business Income Insurance
Business income insurance (also known as business interruption insurance) provides coverage for loss of income and operating expenses if your business must temporarily close to recover from physical loss, damage, or destruction by a covered peril. This coverage includes the business’s net profits and normal operating expenses such as rent, employee salaries, and taxes.
This is an important consideration for indoor sports facilities since damage to your equipment, building, or other business property will have a direct impact on your ability to operate and collect revenue. These damages may also interrupt sporting events, resulting in a substantial financial loss.
Business interruption insurance is unavailable as a standalone policy. Instead, it added to your commercial property insurance policy or bundled with a business owner’s policy.
Example:
- An electrical fire breaks out in your indoor sports facility. Your bleachers, scoreboards, and sound system are damaged beyond repair, and there is massive structural damage to the building. There are no suitable locations you can rent that would accommodate your sporting events, so you are forced to shut down until the damage is repaired and the equipment is replaced. Your insurer would reimburse you for lost income, rent, and other operating expenses.
Additional Coverages
- Equipment breakdown insurance covers the repair or replacement of malfunctioned or damaged equipment. Breakdown and loss of your indoor sports facility’s equipment—such as the heating and air conditioning systems, cooking equipment, electrical control panels, and lighting and sound equipment—can result in a significant loss if the equipment is not properly insured. Equipment breakdown insurance can be added to your commercial property insurance policy as an endorsement or purchased as a standalone policy.
- Commercial crime insurance provides protection for businesses from financial losses resulting from criminal acts. This includes forgery, robbery, burglary, theft, and employee dishonesty.
- Inland marine insurance financially covers products, equipment, and other forms of business property that are not tied to a fixed location and are not covered by commercial property insurance. For instance, this coverage is important if your indoor sports facility has equipment—such as sound, lighting, and display equipment—that constantly travel between your premises and off-site storage.
Pricing and Quotes
Pricing for business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:
- Business size
- Industry
- Location
- Number of employees
- Claims history
Businesses with higher risks will have higher premiums than those deemed lower risk. For example, an indoor sports facility with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.
In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for indoor sports facilities and complexes:
| Provider | General Liability | Professional Liability | Business Owner's Policy |
|---|---|---|---|
| Embroker | ?? | ?? | ?? |
| CoverageSmith | ?? | ?? | ?? |
| CoverWallet | ?? | ?? | ?? |
| Hiscox | ?? | ?? | ?? |
| Thimble | ?? | ?? | ?? |
Business Insurance and Coronavirus
COVID-19 has had a major impact on businesses, including indoor sports facilities, and you may be wondering how business insurance can provide any financial relief. While there is some protection that can be provided, in most cases, insurance will not cover coronavirus-related losses.
You cannot purchase a new policy to cover coronavirus-related losses that have already occurred and insurance policies will not cover losses that have already been discovered.
If you have business interruption insurance, the losses you’ve suffered from temporary closures due to COVID-19 are not typically covered. Unless your policy specifically includes coverage for losses caused by communicable or infectious diseases (which is rare), your business interruption policy will likely only cover losses caused by a direct physical loss or damage.
Workers’ compensation for COVID-19 greatly varies depending on the state. If your employees contract COVID-19 while working, they may be eligible for workers’ compensation payments in some states.
If a client or other third party sues you claiming that they contracted COVID-19 after visiting your business, some commercial general liability policies will provide coverage. Once again, this depends on your individual policy and the laws of your state.
Consult our FAQ on coronavirus and business insurance for more information.
Final Word
Although the process of choosing business insurance for your indoor sports facility may be daunting, it is essential to take your time when considering your various risk exposures to ensure there are no gaps in your coverage. The large range of sports, amenities, and services provided by indoor sports facilities means your business may have very different coverage needs than a neighboring facility. Carefully selecting adequate coverage is essential to protecting your business in the face of an unexpected disaster or accident.
